Credit Reporting Facts

Your ability to borrow money, to be allowed to pay bills on a monthly basis, to get a job that requires you to handle other people's money and, in some instances, to be able to rent an apartment or house, will all depend on your credit rating - whether it is good enough.

Most people have heard of a credit rating but often do not understand exactly what it is.

A credit rating is an evaluation of your ability to honour credit arrangements. It shows lenders what sort of credit risk you are, and signifies how well you have repaid past debts and how you are dealing with debt today.

A credit rating is shown in your credit report, which is calculated from the information recorded in your credit file, which is compiled by the credit reporting agencies, from information supplied to them by organizations you pay bills to, or from whom you have borrowed money.

Anyone who has a bank account and pays bills will have a credit file, as will anyone with a credit card, a car loan or a mortgage.

Your ability to raise finance, and at reasonable rates of interest will depend on the contents of your credit file.

Your credit rating is sometimes referred to as a credit score, and the credit reporting agencies are also known as credit reference agencies, and credit bureaus.